The Real Secret Behind Trump’s Insane Tariff Obsession
Trump’s embrace of the Republican cult of William McKinley—invented a generation ago by Karl Rove—is a vision not, as Rove’s was, of Republican political realignment, but rather of eliminating the income tax. Since the 1950s tariffs have raised no more than 2 percent of federal revenue, but throughout the 19th century, except for a brief period during the Civil War, there was no federal income tax and tariffs were the principal source of federal revenue. McKinley was the last Republican president to resist establishing an income tax. Trump wants to bring those days back. Here’s what Trump said in his inaugural address:
Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens. For this purpose, we are establishing the External Revenue Service to collect all tariffs, duties, and revenues.
Trump doesn’t need to create an External Revenue Service (which would require Congress to pass legislation) to bleed tariff revenue from our trading partners. He just needs a proximate cause. At the moment Trump says it’s to halt the flow of immigrants and fentanyl into the United States, even though crossings on the southern border in 2024 were, at 2.14 million, lower than they’ve been since 2021. Crossings on the northern border are rising, but they still represent less than one-tenth that number. Canada and Mexico have both taken recent steps to reduce these crossings further.
As for fentanyl, Mexico is the principal source, but since 2023 it’s been cooperating with the U.S. on a fentanyl crackdown, extraditing, for example, the Sinaloa Cartel leader Ovidio Guzmán López to the United States. Trump’s new tariff could easily end that cooperation. Canada sends very little fentanyl into the United States because it can’t compete with Mexico’s low labor costs. This past weekend Trump resumed suggesting he was imposing tariffs on Canada to force it to become the 51st state. Any pretext, no matter how ridiculous, will do.
